Considering the higher risk involved in cryptocurrency, the Monetary Authority of Singapore (MAS) has tightened the procedure to approve a crypto license for digital asset providers, making the regime a “responsible global crypto hub.”
Ravi Menon, the managing director of MAS, stressed enacting a more strict process while issuing a company legal license to operate crypto. He cited a bunch of reasons as arguments, including the misuse of crypto for money laundering and terrorism financing.
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While speaking at the Digital Asset Summit and in an interview with Financial Times, Ravi stated,
The licensing process is stringent because we want to be a responsible global crypto hub, with innovative players but also with strong risk management capabilities. We only approve applicants with strong governance structures, fit and proper board and management, and we go through their track record.
The government of Singapore has been steadily enacting crypto regulation rules for the past few years. And the crypto adoption in the state has now changed since the MAS started a crackdown on crypto exchanges, curbed cryptocurrency advertisement, and made ATM operators shut down.
MAS has been actively working to ensure accurate regulations and mitigate the maximum possible risk. However, even a single application out of 100 has not achieved a license as they were unable to meet licensing requirements. Similarly, the law authority so far has approved a fraction of over 170 applicants of digital asset providers.
MAS’s Criteria To Approve Crypto License
Notably, MAS didn’t approve the license for the world’s largest crypto exchange, Binance, in September 2021, reportedly saying the asset provider had failed to meet the criteria under MAS’s AML and KYC requirements. Hence, Binance withdrew its application instead of disrupting its reputation in the media.
While the head of the Central Bank commented that many crypto enthusiasts are “innovative, nimble, and think out of the box,” he said, “However, they lack experience of being regulated. “As such, we need to bridge the culture issue.”
MAS Requirements To Obtain Licence:
- Perform due diligence for all transactions of digital assets committed on the platform.
- Make sure consistency of individuals’ transactions by monitoring customer relationships.
- Track anonymity and misuse of a new product or service by conducting risk assessments regularly.
- Fulfill cyber hygiene and technology risk management requirements.
- Follow the value transfer rule.
On the other hand, Central Bank took a “tough line” across the retail investment of cryptocurrencies, expressed Menon. He adds;
[This is] because we’re not sure that’s a good idea for retail investors to be dabbling in cryptocurrencies. I think many global regulators share similar concerns about retail exposure to cryptocurrencies.
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Those who get approved the in-principle license from MAS for operating digital assets in Singapore include Hodlnaut, Coinhako, Digital Treasures Center, Revolut, and Paxos.
Recently, the MAS has added Luno, a retail-focused company, to the list of approved entities. Luno’s country manager of Singapore, Sherry Goh, stated;
The requirements are, in our view, reasonable and consistent with our objective of providing a safe environment for cryptocurrency users in Singapore.
Featured image from Pixabay and chart from TradingView.com